Last Updated on 27 November 2021 by Dan
Hello everyone! Today’s article is a little niche, but when you work in Finance there’s plenty of people who have aspirations to do the CFA (Chartered Financial Analyst) qualification and achieve charterholder status.
The CFA has a certain reputation – it’s one of the qualifications that if you talk about nearly everyone in the profession will be familiar with. It also has a reputation for significant difficulty and commitment being required, given you can only sit the six-hour (3 hours AM, 3 hours PM) exam once a year (at the later levels).
Update: However that once a year exam is no more! The CFA announced they are moving into using computer based testing, and as a result you can sit the exam on several occasions throughout the year. It’s a welcome change: the CFA has been much slower than other exam organisations to move into computer based tests and eases unnecessary stress and expense on candidates as it enables you to test in other locations as well.
Back when I was sitting these exams myself I would rather frequently find myself questioning if it’s worth it or not – you undeniably give up a lot of time when you’re doing them. I walked away on the other side that there were some argument for and against and thought I’d share them here for those on the same journey.
And if you are sitting them or any other exam – good luck!
Reasons the CFA is worth it
The CFA is genuinely useful and interesting.
Investment can be technical and geeky, but knowing how to properly assess and analyse a company and pull the various strands apart? When you start to apply the material in practice and understand how it’s helping you put the pieces of an investment together it’s honestly pretty fascinating.
Personally I tend to struggle with exams which are very theoretical in nature and where you can’t see a practical side to it – the way the CFA exams deal with conflicts and frames the question means this isn’t an issue at all.
On a practical side, I found that learning from sitting the CFA exams was something that often either directly or indirectly has proved useful to my career via having relevant subject matter expert knowledge, and helped to get me pulled into new areas.
The CFA is wide-ranging
The CFA covers a very wide variety of topics that would usually cover multiple parts of an investment bank or investment management firm, such as fixed income, corporate finance and quantitative analysis.
It’s partially for this reason that it’s interesting – but in terms of usefulness it then theoretically allows you to take up opportunities where if you were a specialist only in one field it wouldn’t be an option.
As you bump up into the more senior grades, this can become particularly useful as you can find yourself with wider management responsibilities that don’t neatly fit one area.
The CFA is respected
One of the biggest advantages is that the fact that it’s such a well known and respected qualification. If you’re interviewing for a new hire and receive a stack of CV’s, it’s instantly a mark that stands out as someone who knows their subject matter well but also has qualities of perseverance and determination.
Reasons the CFA is not worth it
The CFA is tough
If you were coming here hoping for some comfort that the CFA is not difficult then I’m sorry to leave you disappointed! Level 1 is tricky but ok, but Level 2 is absolutely brutal and requires a lot of in-depth knowledge on a lot of areas. The statistic that the majority of candidates will require at least one re-sit is well known.
Nothing in the CFA if you took each question on a stand-alone basis is actually that difficult – given time you could easily get it cracked. The problem is the sheer variety and volume of things that can come up in the six-hour exam, and whilst certain questions do pop up each time you never get away from the sense that you really do need to know absolutely all of it.
Personally I don’t like that – I think it forces the exam somewhat away from really knowing your stuff and more towards feeling like a memory test. Alas, they not I choose how the exams are run.
The toughness element leads to the respect side on the other side of the balance sheet, but it does create a real life trade off. You lose weekends and holidays to the exam, and have to be very disciplined with your social life. The extent to which this happens to be successful I think can be slightly unhealthy – life is usually happiest with some form of balance. Quite honestly, I’m not sure looking back that I can say I got out what I put in to the CFA.
I will put one crumb of comfort in here – a lot of the questions have some form of mathematical basis and if you’re a particularly quantitative person that things like formulae are quite natural for, I think you do have an advantage and elements of the exam become quite simple.
The CFA is wide-ranging (and that’s not always a good thing)
The thing that was a positive above is also a negative. Investment Banks usually work on the basis of training you to be very, very, very good at one particular thing.
Whilst there may be some movement around what exact element you’re responsible for in your business unit of choice, a complete change of discipline (say a derivatives trader becoming a corporate financier) is not unheard of but actually quite rare.
So it’s worth really thinking if you want to go down this route, and if the breadth of the CFA course really offers actual value to you. Sometimes it can be better to achieve one of the excellent more specialist qualifications that can be completed a lot quicker to help you excel in your field.
The CFA is not simply a route to the Front Office
I think the CFA exam offers a lot of use to those who are already in the front office – but there’s no small number of candidates who sit the exam because they’re ambitious types and hope to use it as a lever to get into the front office.
I would urge some caution with this route. Now it’s entirely possible and definitely won’t hurt you, but those who I saw as being successful with this route it’s usually been by also having another factor like building a connection with front office personnel or being able to demonstrate exceptional skills and understanding of a business area/clients.
The qualification helps, but it definitely should not be seen as a “golden ticket” and if you’re sitting for this reason alone you really should be aware with this – alas, plenty become disillusioned.
The CFA is expensive
Sitting the CFA exams is not a cheap business relative to some of the other qualifications out there – the exam fee is relatively expensive and incorporates the cost of the books as well. Throw in some resits and tuition (which I would recommend) and you can be talking quite a bit of money.
Other more specialised qualifications are a bit cheaper – but in part you’re paying for the respect of the CFA name as well.
Any questions or comments?
What have your experiences been so far with the CFA? Have you done it and feel it’s been worth it for you? Or have you done something else and never looked back? We’d love to hear from you in the comments below – especially if you have questions if you’re going through the “is it worth it” debate yourself.
And that’s it!
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Firstly, I never knew it was a 6 hour exam that could only be sat once a year – wow! Its something I once considered – for all of about 3 days – some people are book smart, some people are street smart – I considered myself to be somewhere in the middle, and thought it may be feasible – I quickly decided it wasn’t for me! I was also one who saw it as a guaranteed career, but I think for something like this you need to have a real passion for it, not just because you want a solid job.
Thanks for the comment! I should actually clarify that whilst the total exam is 6 hours it’s a 3 hour AM paper then a 3 hour PM paper rather than continuous.
The once a year requirement was very tough, but actually this article can now be updated on that! The CFA have changed to using a computer based test and allowing sitting on a few more occasions than just the once – a positive step.
Thank you for this article. I have done (and blogged about) the CFA and I agree with the points that you mention. For me the qualification was worth it and if anyone is serious in having a good career in finance I definitely recommend it. I have seen a lot of people signing up for level 1 light heartedly and stopping so to those people I recommend thinking carefully before registering and potentially wasting their money.